Fiscal and Monetary Policy in Republic of Macedonia

Topics: Monetary policy, Macroeconomics, Inflation Pages: 7 (2751 words) Published: June 29, 2010
Expert: Blagoja Nanevski, PhD 1. Fiscal and Monetary Policy

1.1. Planned and implemented activities of the Government of RM in the reporting period 1.1.1. Fiscal Policy In the reporting period, the fiscal policy was directed towards realization of several previously planned activities, as well as undertaking measures which should have acted in the direction of gradual drawing of the national economy out of the recession phase. They are mainly based on the following: a) Further liberalization of the fiscal policy, i.e. increasing the fiscal freedom of the entrepreneur with the purpose of stimulating the development of the country. That characteristic is determined by many previously undertaken measures and several additional ones that were noticed and highly evaluated in the annual report of the “The Heritage Foundation” and “The Wall Street Journal” which will be detailed elaborated in the following chapter of this Report; b) Continuing the cut in the social contributions rates. As of 1 January, 2010, the contribution rate for pension insurance was cut from 19 to 16.5 percent, the contribution rate for health insurance was cut from 7.5 to 7.0 percent, and the contribution rate for employment was cut from 1.4 to 1.2 percent. The aim of these measures is cutting down the financial burden of the business subjects and creating the possibility for giving financial means which will be used for stimulating production, thus increasing the number of the employees (decreasing the number of unemployed); c) Realization of the planned dynamics for approving subsidies for certain agricultural products. With the budget of RM for 2010, they are planned to reach the amount of 100 millions of euros. Their realization in the period of 2010 would mean completing the program-planned amount for granting subsidies in agriculture and thus its adaptation to the corresponding system of agricultural financing determined in the European Union. The bulk of the subsidies is planned to be granted for support of the agricultural production; d) Immediately related to the previous one is also the realization of the program determination of the Government of RM for stimulating the tourism as an export branch. In the Budget of RM for 2010, subsidies of 100 euros in denar equivalent value are planned for the tourist agencies that will bring a group of at least ten tourists from the neighbouring countries into the country and who will realize at least three overnight stays with breakfast in a categorized object; e) According to the dynamics of harmonization of the national customs policy with that of the World Trade Organization, as of 1 January 2010, the Government of RM adopted lower customs duties that are calculated when importing 426 products (tariff rates); f) In the function of enhancing the business climate in the country, as one of the substantial conditions for attracting national and foreign investments, the establishment of the real-estate cadastre continued in the reporting period. In the end of 2009, that cadastre was established for the 96 percent of the real-estates in RM;

g) Similarly as the previously mentioned measure, the Real Estate Cadastre Agency cut down the prices of its services in a range from 10 to 72 percent depending on the type of the service. In addition, the prices for the physical and legal entities have been made equal, as well as the prices for entering the family apartment house (a flat) and office space into the cadastre registry and registering a mortgage. In the end, a system of premarking has been established which includes entering an apartment building in the cadastre while still in the construction phase, which prevents multiple sale of a same apartment. Besides these (program) activities, in the analyzed period the Government of RM undertook other activities as well, which arose from the need for stimulation of the economy for drawing out of the recession and reinforcing the process of decentralization of the...
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